A cynical commentary about developments in the South African financial markets and the incomprehensible activities and pronouncements of bureaucrats and politicians.

Friday, 11 July 2014

CHECK THIS LITTLE BEAR’S BIRTH CERTIFICATE PLEASE

Half the year has now passed but it will
be only right at the end of next month that the machinery will spit out the GDP
numbers for the second quarter and only then will we discover if we have been
engulfed in an economic recession or not. Talking heads that are actually paid
to make forecasts about these things are already embroiled in public squabbling.
Some of us have noted the slight softening of JSE share prices and ask if that might
reflect the concerns about where further huge earnings growth could come from.
In the next week or so the first of the half-year company results will appear
and may confirm that in some areas of the economy it has become harder to
control costs and get paying customers to place orders.

One of the most sensitive economic
statistics is the rate of exchange between our runt and other currencies. On
balance it looks as if fewer people than in the past are demanding rands. In
fact so many are offered for sale at the moment that a foreigner can buy one for
less than five and a half new English pence apiece. At that price overseas
holiday makers have been seen jostling for attention in estate agents specialising
in the more picturesque regions of the nation. Even the demand by our local
royal for his (?) land back does not worry them

Recently announced was yet more legislation
from the vindictive communists who hate to see people enjoying themselves and
embracing freedoms which have not been specifically endorsed. An especially
distressing aspect of any regulation is that it usually entails an interaction
with a dysfunctional government department in order to obtain the documents and
permissions required. It is for example already tragically obvious from the
nation’s traffic accident record that the requirement of renewing a driving
licence on a regular basis has utterly failed to produce safer and better
drivers. Adding to the foolishness is a system that necessitates at least two separate
visits to the issuing office to effect the renewal. Its not surprising that
urban legend has it that most drivers don’t bother. Just promulgated is the
requirement for both arriving and departing family travellers to produce a
specific version of each child’s birth certificate. Firstly, in this country,
acquiring such a document is not convenient, seamless nor speedy. Further it is
doubtful whether this is the most effective measure to stem the vile crime of
child-trafficking, if only because the enforcing officials are so often easily
corruptible.

And here in the financial markets a new
and bigger central registry for over-the-counter derivatives is on the way. As
hinted in their name these entities are often unique and created from nothing
more than the intellect of a smart trader. This baffles bureaucrats who are
often driven frantic with envy and suspicion that some people are getting rich
from trading in things they don’t understand and probably can’t tax. Undoubtedly
the risks and losses inherent in these pieces of whimsy are poorly understood
by pretty much everyone including and especially the risk managers of the
trader’s own institution. Reporting to some non-swimming lifeguard in a high
chair at the top of the beach will do little to reduce the damage when an
unexpected rip-tide hits. All that needs happen is to let the failures get
swept out to sea in spectacular and noisy fashion and to reject calls to launch
lifeboats full of taxpayer’s money.

And so at last we grind to the last round
of the round-robin segment of the Super 15. This tournament seems to me to be
over-designed.It’s really not a crime
if there’s a weekend between March and October not filled end to end with
rugby. However, presumably the world of rugby is a true free market which is driven
by everyone concerned attempting to maximise their earnings at the expense of
someone else’s effort, money and wellbeing. Softies, including fans, unable to
take the heat can read a book.

The big one this weekend for most people
will of course be the Soccer World Cup final. The interesting thing about this
match is that Germany
appears to have qualified by scoring a converted try. Surely some mistake?